Gold down, awaits Fed minutes for stimulus clues
London (Nov 20) Gold edged lower on Wednesday, failing to capitalise on dovish Federal Reserve's comments as investors awaited the release of the minutes of the U.S. central bank's policy meeting later in the session for clues on when it will trim its stimulus.
In a speech that echoed comments by his nominated successor, Janet Yellen, Bernanke said that while the economy had made significant progress, it was still far from where officials wanted it to be.
"The key issue today is the FOMC minutes and investors will look to see if there is any surprise in the announcement, although I doubt it," Sharps Pixley CEO Ross Norman said.
"There is nothing really new in terms of macro drivers at the moment ...the tapering discussion continues and prices may remain under pressure until the Fed clarify the timing of it."
Spot gold fell 0.3 percent to $1,270.96 an ounce by 1058 GMT. The short-term upside was capped at 10-day moving average of $1,290, while a break below $1,260 would trigger losses to $1,220, VTB Capital said in a note.
U.S. gold futures for December delivery fell 0.3 percent to $1,270.10 an ounce.
The dollar was marginally lower against a basket of currencies ahead of the minutes for the October 29-30 Fed meeting, due for release at 1900 GMT. Investors were looking for detail of Fed discussions on the timing of any tapering.
Bernanke also said that the Fed will maintain ultra-easy monetary policy for as long as needed and will only begin to taper bond buying once it is assured that labour market improvements would continue.
The speech supported expectations that the Fed would not immediately roll back its $85 billion in monthly bond purchases.
The U.S. central bank may need to wait until next year, possibly until March, before beginning to wind down its stimulus program, Chicago Fed President Charles Evans said.
The bond purchases had been a support for gold prices until recently as investors sought a hedge against inflation.
However, gold has dropped nearly 25 percent this year as an improving economy prompted investors to channel money towards stocks and after the Fed in May signalled it would start looking at rolling stimulus back.
ngs in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund and the best measurement of gold market sentiment, fell 1.50 tonnes to 863.01 tonnes on Tuesday - their lowest since February 2009.
Physical demand from China and other Asian countries has failed to pick up below the $1,300 level as consumers looked to have satisfied their needs when prices fell earlier in the year.
"We are now in the heart of the traditional season for buying gold in main Asian markets but demand remains remarkably light and that's another element of support missing for gold at the moment," Norman said.
Silver rose 0.2 percent at $20.35 an ounce, having touched a three-month low of $20.46 on Tuesday.
Spot platinum fell 0.2 percent to $1,408.49 an ounce, while spot palladium was down 0.2 percent at $716.72 an ounce.
